THE FOLLOWING LETTER WAS SENT TO THE ATTACHED LIST OF

U.S. & FOREIGN AIRLINE, and TRAVEL AGENCY EXECUTIVES

This
letter follows up on previous advertising guidance we have provided air
carriers and concerns the listing in "air tour package" fare
advertisements by airlines and/or their agents (including travel agents)
[hereinafter “sellers”] of (1) additional charges for government-imposed taxes
and fees that are collected by sellers and (2) other charges and fees
associated with such packages that may be collected by airports, hotels, or
other entities. This letter also
contains information supplementing Secretary Peña’s December 20, 1994, letter
regarding percentage-off advertising.

Based
on a review of a variety of advertisements in newspapers from different parts
of the country, we have noted a widespread disparity in the methods by which
air carriers, and travel agents advertising in conjunction with specific air
carriers, have listed government-imposed taxes and fees as well as other
charges in advertisements for air tour packages. Some of the advertisements have been inconsistent with our
full-price advertising rule and long-standing enforcement policies. The purpose of this letter is to provide
guidance on how these charges should be advertised. To accomplish this purpose, it is being sent to U.S. major and
national carriers, larger foreign carriers, and larger travel agencies.

Section 41712 of Title 49 of the United
State Code prohibits unfair or deceptive practices or unfair methods of
competition by air carriers or their agents (49 U.S.C. § 41712
(1994)). Section 399.84 of the
Department’s regulations (14 CFR 399.84) requires any advertising or
solicitation for air transportation that states a price for such air transportation
to state the entire price to be paid to the seller. These "full-price" advertising requirements apply to
package offerings where an air fare is bundled with a hotel, cruise, tour, car
rental, or other services.

As we have advised the industry in the
past (see, e.g., December 20, 1994, letter from Secretary Peña
and May 1992 letter from our office), our office, as a matter of enforcement
policy, has permitted sellers to state separately in fare advertisements
government-imposed and -approved per-passenger taxes and fees, such as customs
fees, departure taxes, and passenger facility charges (PFCs), so long as the
charges are levied and collected on a per-passenger basis and their existence
and amount are clearly indicated in the advertisement. This office considers advertisements which
do not comply with this policy to violate both section 41712 of Title 49 and
section 399.84 of the Department’s regulations, and we have pursued enforcement
action where such advertisements have failed to comply with these
requirements. (See, e.g.,
Orders 95-1-39, 93-4-40, 92-10-41, and 92-7-19.)

The above policy on the listing of
government-imposed fees in fare advertisements includes fees imposed by foreign
governments (e.g., foreign departure taxes or port charges). If these fees are collected by sellers and
are imposed on a per-passenger basis, they may be listed separately in air tour
package advertisements. With regard to
the separate disclosure of such fees in advertisements where multiple
destinations are listed, a maximum fee amount may be stated, a fee may be
listed for each destination, or the fees may be listed as a range. The word “approximately” or a range of
amounts may be used to account for minor currency exchange fluctuations. If these types of taxes or charges are
collected by the government entity (e.g., an airport or port authority)
and not the seller, 14 CFR 399.84 is not applicable, but under 49 U.S.C. §
41712 the advertisement must disclose the existence of the charges and
highlight that the charges will be collected by the foreign authority.

Similarly, in other situations where
passengers will incur additional mandatory charges or fees but the charges or
fees are not paid to the seller of the air tour package, the seller must make
clear in the advertisement the nature of the fee to be paid and the party (e.g.,
hotel, car rental company, or travel/vacation club) to whom the surcharge or
fee is to be paid. For instance, if a
hotel, not the seller, collects an "energy surcharge," "linen
charge," or "security fee," the advertisement should identify
the type of surcharge or fee and note that payment is made directly to the
hotel. This type of disclosure will put
consumers on notice about additional charges they will incur in connection with
their trip and ensure compliance with the statutory requirement under section
41712 to avoid deception. It will also
aid this office in determining, without a more formal investigation, whether a
charge is properly stated separately.

Advertisements also must be internally
consistent so as not to mislead the consumer.
One newspaper advertisement we reviewed declared that "all taxes
and service charges are included" in the air tour package, but the fine
print contained a statement that the foreign departure taxes and hotel service
charges were excluded. In this
situation, the advertisement violated section 41712 even if the charges or fees
are paid to an entity other than the seller (i.e., an airport authority
or hotel) because the conflicting statements render the ad deceptive. In another instance, one airline's recent
newspaper advertisement listed several different air tour packages on one page,
with each ad using different language about what costs were included in the
package. One package included "all
applicable taxes," another included "air and hotel taxes," and
yet another included "hotel taxes and hotel service charges." Such language differences are confusing, at
best, and may mislead consumers about what is or is not included in the air
tour package.

Generally, advertisers should favor more
precise terminology and avoid confusing terms that could mislead
consumers. As noted above, there are
situations in which the Department cannot, without further inquiry, ascertain
whether the charge is properly stated separately in accord with our enforcement
policy. For instance, one advertisement
noted in the fine print "additional airport charges" when it should
have used language to the effect that the "fare does not include passenger
facility charges of $____."
Another advertisement cited "additional international fees" in
the fine print when it should have stated that "international departure
taxes of approximately $____ are not included in the quoted price." Greater precision in terms enables consumers
to approximate the total cost of their travel and this office to more
informally monitor advertisements to ensure that they comply with our
regulations.

As
a reminder of information that has been disseminated widely in the past (See,e.g., 54 FR 31,052; July 26, 1989, and the May 1992 industry letter
cited above), fees imposed by government entities on other than a per-passenger
basis, such as ad valorem fuel taxes,
per-room charges, and per-day auto rental charges, must be included in the
advertised total price to be paid to the seller and may not be stated
separately. Furthermore, general
phrases that preclude consumers from calculating an actual, maximum, or range
of fees, such as “additional taxes and surcharges may apply” are not permitted
under our full-price advertising rule, except where, as noted above, they are
collected by someone other than the carrier and the advertisement so
states. Carriers and agents are,
however, encouraged to include the amount of such additional charges to foster
full disclosure and thereby avoid customer disputes.

The
following examples are intended to illustrate acceptable ways of listing
various fees and surcharges not included in a total air tour package price:

Does not include foreign departure/security/port charges of up to
approximately $(amount) per passenger, depending on destination.

Does not include foreign departure/security/port charges of
approximately $(amount) to $(amount) per passenger, depending on destination.

Foreign departure taxes/port charges of up to approximately $(amount)
per passenger are not included in the package price and must be paid directly
to the appropriate airport/port authority.

(5)
Does not include hotel energy/linen/service charges to be paid directly
to the hotel. (Note: If paid directly to the carrier or its
agent, these charges must be included in the overall price.)

State-imposed rental car tax of $2 per-day payable to the rental car
company is not included in the air tour package price. (Note:
If paid directly to the carrier or its agent, these charges must be
included in the overall price.)

Please
bear in mind that the examples set forth above are intended as guidance
only. We recognize that other methods
by which carriers disclose government-imposed fees and taxes in advertisements
may be acceptable, and we do not intend to limit carriers in their use of
appropriate alternatives. Our
regulations, however, mandate that a consumer be able to easily determine from
a fare advertisement the full price to be paid to the seller for the entire air
tour package advertised, recognizing that certain of the relatively de minimis charges mentioned above may
have to be presented in terms of approximations or ranges, and section 41712
prohibits ads from otherwise being deceptive, as well.

In
addition to the above matters, this office wants to reemphasize its enforcement
policy with respect to percentage-off advertising. In Secretary Peña’s December 20, 1994, letter to air
carriers, the Secretary discussed the “benchmark” fares (the fares to which the
savings are being compared) in terms of two requirements. First, the “benchmark” fare must have been
offered for sale in reasonable quantities immediately prior to the ad for the
new fare. Second, the advertisement
must either identify and describe the “benchmark” fare, or the
“benchmark” fare must be “a discount fare comparable to the advertised fare,
with similar restrictions.” This office
interprets “a discount fare comparable to the advertised fare, with similar
restrictions” to mean the lowest
priced discount fare comparable to the advertised fare, with similar
restrictions. This interpretation
comports with the statutory requirement of section 41712 and with our
long-standing enforcement policies with respect to these types of
advertisements. It also comports with
the Secretary’s stated objective of ensuring that consumers actually receive
the savings they should expect to receive based on the advertised statements.

In order to provide the widest and most effective distribution possible of the
information in this letter, we ask that each airline provide a copy of this
letter to any of its agents that might advertise air tour packages using the
airline’s services. Since we are
sending this letter to several major travel agencies and are asking airlines to
ensure distribution to their agents, we want to remind travel companies to the
extent that they act as ticket agents as defined in 49 U.S.C. § 40102, i.e.,
sell air travel packages as a principal or as an agent of an airline, that 49
U.S.C. § 41712 applies to them and that 14 CFR 399.80 of the Department’s
regulations defines certain practices by such companies as unfair and deceptive
in violation of the statutory provision.
For example, pursuant to 14 CFR 399.80(f), ticket agents may be subject
to enforcement action in their individual capacity for misrepresenting fares or
services in connection with air tour packages.
Accordingly, we remind all travel companies acting as ticket agents to
adhere to the Department’s rules and enforcement policies regarding advertising
of air transportation and services in connection with such transportation.

If you have questions or desire additional information about our policies, please
contact Dayton Lehman, my deputy, or Larry Organ of my staff at (202)
366-9342. Our FAX number is (202)
366-7152. You may also contact Hoyte
Decker, Assistant Director of our Airline Consumer Protection Division, at
(202) 366-2220.